In an unprecedented move, Rahco is threatening to
take the latter to court for allegedly defaulting on concession fee
payments for more than seven years. The firm took over all activities
previously undertaken by the Tanzania Railway Corporation (TRC),
including developing, promoting and managing rail infrastructure assets.
The law allows Rahco to delegate the task of
providing rail transport services and the company granted TRL the power
to run trains under a concession agreement. Rahco Managing Director
Benhadard Tito told The Citizen in an exclusive interview that
one of the biggest challenges Rahco faces is TRL’s failure to pay
concession fees and other statutory obligations--and this has crippled
Rahco’s performance. TRL now owes Rahco Sh194 billion in unpaid fixed
concession fees.
“TRL also owes us huge amounts in terms of
variable concession fees that are unknown because the company has not
been audited for the past four years,” said Mr Tito.
Rahco argues that TRL’s failure to pay the
concession fees has significantly affected its performance. It argues
that workers currently receive 60 per cent of their salaries from the
government due to the fact that the company does not have enough funds
to run its activities, including paying salaries.
Said Mr Tito: “It is a shame for an institution
like Rahco to depend on the government for its salaries. I urge the
government to direct TRL to pay us the required concession fees so we
can get rid of government dependency, otherwise the issue can only be
settled in court.”
If TRL does not pay the concession fees, it will
continue eating into Rahco’s account, making it impossible for the
company to run. “The implication is we are owned by the same father--the
government--who is very sympathetic to TRL,” Mr Tito explained.
TRL has paid the concession fees only once--and
that was in the first quarter of 2007, when it paid $1.5 million. “I
hate it when people say we depend on the government to run some of our
activities,” Mr Tito added, “but the problem is that the government is
not directing TRL to pay us the concession fees as agreed so we can be
independent.”
Meanwhile, Rahco is in the process of terminating
its concession agreement with TRL so that it can put in place another
measure that will make TRL pay up. “We agreed with the Ministry of
Transport, under the Big Results Now (BRN) initiative, that the
concession agreement has failed,” said Mr Tito, “so we are discussing
the best way to terminate the contract and replace it.”
He believes, though, that the truck access fee
would be more effective going forward. But, according to TRL Managing
Director Kipallo Kisamfu, the debt is more historical than real. “The
debt referred here goes back to the days when TRL was under RITES of
India, who ran the company for three years from 2007,” he added. “RITES
failed to pay the concession fees and the contract was terminated.”
When the government bought the TRL shares from
RITES, it acquired all its liabilities, including debts. “TRL it was in
very bad shape, to the extent that it was impossible to generate cash
for running all our activities, including paying the concession fee.” Mr
Kisamfu said. “All I can say is that we are unable to pay the debt.”
Given TRL’s poor financial condition, according to
Eng Kisamfu, the government--through BRN--decided to terminate the
concession contract and replace it with another agreement.“We will be
ready to pay any truck access fee if introduced,” he added. “But we
don’t have the capacity to pay the debt now.”
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